How Are Firms Affected by Health Law Delay?

A one-year delay in a central part of the health care overhaul is likely to have its biggest impact on small and medium-sized businesses, not the number of people who will be gain health insurance coverage.

The Obama administration said Tuesday that it would postpone until Jan. 1, 2015, the effective date of what’s called the employer mandate portion of the Affordable Care Act. The law had required companies with 50 or more employees to provide affordable health coverage for their workers as of Jan. 1, 2014.

That provision affects by some estimates just 4 percent of the nation’s more than 27 million companies. And many of those companies are already providing insurance to their workers.

Other provisions of the ACA, including the creation of state and federal health insurance exchanges, remain on schedule. Those exchanges are where individuals and small and medium-size businesses will be able to purchase health care policies.

Some questions and answers about the impact of the delay:

Q. How does Tuesday’s decision affect big companies or large employers?

A. Under the health law, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance. That’s the requirement that is now delayed until 2015.

Most medium-sized and large businesses already offer health insurance. Ninety-eight percent of all companies with at least 200 workers provided health benefits to their employees last year, according to an annual survey done by the Kaiser Family Foundation and Health Research & Educational Trust. Ninety-four percent of companies with 50 to 199 employees provided health benefits.

The mandate was expected to have the biggest consequences for major chain hotels, restaurants and retail stores that employ many low-wage workers. Some had threatened to cut workers’ hours, and others said they were putting off hiring, so those plans may be delayed.

Q. How are small and medium-size businesses likely to react to the one-year delay?

A. It’s fair to say many are relieved — uncertainty over the costs of health insurance has contributed to their anxiety about their revenue and the economy, and to their reluctance to hire or expand. That’s particularly true of companies that have just under 50 employees and that have been holding off new hires because they don’t want add workers and then be subject to the law. Small business advocates welcomed the announcement.

“It will give people more time to have an opportunity to do the very complex calculations to comply with the ACA,” said David Burton, general counsel of the National Small Business Association. “Until the insurance companies’ rates are learned, it’s impossible to do the math and figure out whether you’re going to buy insurance.”